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LSB March 2018_Web


BOOKSHELF T Mundy, A Kennedy, J Nielsen (editors) The Federation Press 2017 PB $89.95 THE PLACE OF PRACTICE: LAWYERING IN RURAL AND REGIONAL AUSTRALIA Abstract from Federation Press The Place of Practice is a unique collection that aims to support law students and early career lawyers considering a career in rural and regional communities. Through the lens of ‘place’, it canvasses the ways in which lawyering and legal practice differs in the rural and regional context, and the particular issues and barriers facing clients and rural and regional communities. By recognising the fundamental diversity of rural and regional communities and the important role that lawyers play in facilitating access to justice within them, The Place of Practice focuses on the key skills, knowledge, and tools of resilience and wellbeing needed to thrive in rural and regional legal practice. Contact Federation Press: 02 9552 2200 By D S K Ong The Federation Press 2017 HB $130.00 ONG ON RECTIFICATION Abstract from Federation Press In Ong on Rectification, Professor Denis SK Ong brings his customary penetrating analysis of the authorities to the equitable remedy of rectification. Topics discussed include: the nature of rectification; a detailed exploration of the principles of contractual construction; the difference between construction and rectification; rectification of both common and unilateral mistakes; and rectification of wills. Professor Ong very carefully sets out both the Australian and English authorities, highlighting the differences between them as well as remaining “grey” or unresolved areas. Contact Federation Press: 02 9552 2200 I Freckelton & K Petersen The Federation Press 2017 PB $145.00 TENSIONS & TRAUMAS IN HEALTH LAW Abstract from Federation Press This book builds upon the successful Controversies in Health Law (1999) and Disputes and Dilemmas in Health Law (2006). Under the same editorship, it is substantially larger (37 chapters instead of 18 and 30 respectively) and correspondingly more comprehensive. It retains the lively analysis and the focus on controversial and cuttingedge problems in health law. The chapters are broken up into 10 parts covering Human Rights Issues; Ethico- Legal Issues; Global Health Issues; Consent Issues; Privacy and Confidentiality Issues; Reproductive Technology Issues; Health Research Issues; Death and Dying Issues; Legal Liability Issues; and Reform and Regulatory Issues. Contact Federation Press: 02 9552 2200 GE Dal Pont & KF Mackie 2 nd ed LexisNexis 2017 HB $259.00 40 THE BULLETIN March 2018 LAW OF SUCCESSION Abstract from LexisNexis An authoritative commentary of Australian succession law focusing on theory behind relevant legal rules, counter-views and comparative analysis. Now in its second edition, Law of Succession is an authoritative commentary of Australian succession law. Written by experts in the field, the focus is on explaining the theory behind relevant legal rules as well as counter-views and comparative analysis. It takes a technical approach and is a valuable reference for practitioners dealing with practical succession issues. Contact LexisNexis: 1800 772 772

TAX FILES Tax Changes for Developers of New Residential Property JOHN TUCKER, DW FOX TUCKER LAWYERS One of the more significant tax measures before Federal Parliament is that proposing to give effect to the Government’s 2017-18 Budget measure requiring purchasers of new residential premises (or subdivisions) to withhold and remit directly to the ATO from 1 July 2018 as part of the settlement, GST on the sale consideration. This is in lieu of the vendor who, under the ordinary operation of the GST provisions, as the supplier, has the liability to remit GST to the ATO. The proposed measures do not broaden the base by expanding the land transactions that are subject to GST, the rate, nor the calculation of GST that would otherwise be payable. GST has always been charged on new residential premises and subdivisions. An Exposure Draft of the proposed legislation was circulated for consultation and on 8 February 2018. A Bill for the new measures was introduced before Parliament as part of Treasury Laws Amendment (2018 Measures No. 1) Bill 2018. The measures as tabled took on board much, but not all, of the concerns expressed during the consultation period. The key changes proposed by the Bill include: • Where an entity makes a taxable supply of new residential premises or a new subdivision of potential residential land 1 , instead of the purchaser paying the total consideration (subject to contractual adjustments) to the supplying entity, the purchaser will be required to make a payment of a portion of the ‘contract price’ to the ATO directly prior to or at the time consideration is first provided (other than as a deposit). • The amount to be withheld and paid to the Commissioner will be dependent on whether the supply is made under the margin scheme. If the margin scheme does not apply, the purchaser must withhold 1 /11 th of the contract price (or the ‘price’ of the supply if the contract does not specify a contract price). If the margin scheme applies to the taxable supply, the purchaser must withhold 7% of the contract price or ‘price’, or a greater amount that has been determined by the Minister in a legislative instrument. • Unless the purchaser is registered for GST and acquires the land for a creditable purpose, an entity making the supply of residential premises or potential residential land (not just new residential premises) for sale or longterm lease must provide a notification to the purchaser before making the supply providing relevant details to the purchaser. • An entity that makes a taxable supply of new residential premises will be entitled to a credit in its BAS for the amount of the payment made by the purchaser to the ATO (to in effect offset the GST debit required to be disclosed in the BAS for having made the taxable supply) thereby preventing double taxation. Of significance, entitlement to a GST credit is conditional on the GST that has been withheld being actually paid by the purchaser to the ATO. That is, if the purchaser withholds from the consideration payable to the vendor an amount for GST to be directly remitted to the ATO, and whether fraudulently or innocently fails to actually remit that amount to the ATO, the vendor will not receive a credit in their BAS and consequently remain still liable to the ATO for GST on the sale. Further, unlike other withholding regimes such as the PAYG system that impose a penalty on the withholder for failing to withhold and remit a withheld amount to the ATO and a right for the ATO to recover from the withholder the amount withheld, the proposed withholding measures do not expose the purchaser to subsequent recovery action from the ATO for the withheld non-remitted amount. This is a contractual matter between the vendor and purchaser. Purchasers will however be liable to statutory penalties. As a consequence these proposed measures represent a significant shift in the due diligence and risk of GST noncompliance by a purchaser as well as a vendor. If suppliers of new residential premises are not to suffer a significant loss from non-remittance by purchasers their representatives at settlement will need to ensure the purchaser’s remittance to the ATO of the GST amount. To enable this, supporting provisions in contracts for sale may be required perhaps entitling and authorising the vendor to remit on the purchaser’s behalf. On the other hand purchasers representatives will want to be able to ensure that the purchaser is not exposed to suffering a penalty for nonremittance. The measures apply to supplies of new residential premises for which consideration (other than a deposit) is first provided on or after 1 July 2018 (with a 2-year transitional period for pre-1 July 2018 contracts where the consideration is provided before 1 July 2020). Given this, vendors of new residential premises (and their advisers) need to quickly review, amongst other things, current contracts, settlement procedures and financing arrangements to protect their position with respect to these proposed changes as finally legislated. Tax Files is contributed on behalf of the South Australian based members of the Taxation Committee of the Business Law Section of the Law Council of Australia. B Endnotes 1 A term with existing definition under the GST Act and for this article grouped under “new residential premises”. March 2018 THE BULLETIN 41

Platform July 2018